JOSEPH LOMBARDO, PETITIONER V. UNITED STATES OF AMERICA
No. 88-1616
In the Supreme Court of the United States
October Term, 1988
On Petition for a Writ of Certiorari to the United States Court of
Appeals for the Seventh Circuit
Brief for the United States in Opposition
TABLE OF CONTENTS
Question Presented
Opinions below
Jurisdiction
Statement
Argument
Conclusion
OPINIONS BELOW
The opinion of the court of appeals (Pet. App. A1-A10) is reported
at 865 F.2d 155. The opinion of the district court (Pet. App. B1-B4)
is unreported.
JURISDICTION
The judgment of the court of appeals was entered on January 12,
1989. The petition for a writ of certiorari in this civil case was
filed on April 3, 1989, and is therefore timely. The jurisdiction of
this Court is invoked under 28 U.S.C. 1254(1).
QUESTION PRESENTED
Whether petitioner's convictions should be vacated on collateral
attack in light of McNally v. United States, 483 U.S. 350 (1987).
STATEMENT
In 1982, petitioner, along with four co-defendants, was convicted
on one count of conspiracy to bribe a United States Senator, in
violation of 18 U.S.C. 371; one count of interstate travel with the
intent to promote bribery, in violation of 18 U.S.C. 1952; and nine
counts of wire fraud, in violation of 18 U.S.C. 1343. Petitioner's
conviction was upheld on direct appeal. United States v. Williams,
737 F.2d 594 (7th Cir. 1984), cert. denied, 470 U.S. 1003 (1985). In
1987, this Court decided McNally v. United States, 483 U.S. 350, in
which it held that the mail fraud statute did not prohibit schemes to
defraud citizens of their "intangible right" to honest government
services. Pursuant to 28 U.S.C. 2255, petitioner subsequently moved
to vacate his convictions in the United States District Court for the
Northern District of Illinois. The district court denied the motion.
Pet. App. B1-B4. The court of appeals affirmed. Id. at A1-A10.
1. Petitioner's convictions arose out of his participation with
four co-defendants in a scheme to sell a piece of property located in
Las Vegas, Nevada, to then United States Senator Howard Cannon. His
co-defendants were Roy L. Williams, the president of the Central
Conference of Teamsters; Allen Dorfman, a former special consultant
to the Teamsters Central States Pension Fund (the Pension Fund);
Thomas F. O'Malley, a trustee of the Pension Fund; and Andrew G.
Massa, a former trustee of the Pension Fund.
The Las Vegas property, which was located across the street from
Senator Cannon's residence, was owned by the Pension Fund. In late
1978, Senator Cannon and a group of neighbors expressed interest in
purchasing the property in order to prevent it from being commercially
developed. At that time, legislation designed to deregulate the
trucking industry was pending in Congress. The Teamsters strongly
opposed that legislation and Senator Cannon, who was the Chairman of
the Senate Committee on Commerce, was in a position to affect its
future. Seeking to influence Senator Cannon's actions on the
legislation, Williams and Dorfman promised to take steps to enable the
Senator's group to purchase the Las Vegas property from the Pension
Fund for $1,400,000, to the exclusion of any higher bids. Pet. App.
A3.
Williams and Dorfman did not have direct control over the sale of
Las Vegas property, which was known as Wonderworld, because the
Pension Fund had agreed in 1977 to turn over control of its assets to
Victor Palmieri and Company, a management company, in order to retain
its tax-exempt status. Accordingly, in an effort to fulfill their
promise to Senator Cannon, the defendants attempted to control the
sale of the property by persuading others to withdraw their higher
bids. In particular, petitioner proposed to Dorfman that they send
O'Malley and Massa to talk to Allen Glick, who had submitted a bid of
$1,600,000 for the Wonderworld property. After Williams approved
petitioner's proposal. O'Malley and Massa met with Glick and
persuaded him to withdraw his bid. Shortly afterwards, Glick
persuaded a business partner, Fred Glusman, to withdraw his
independent bid of $1,600,000 for the property. Nonetheless, despite
the efforts of petitioner and his co-defendants, the Wonderworld
property was eventually sold to an unrelated corporation for
$1,600,000. Pet. A3-A4.
2. In McNally, this Court held that mail fraud convictions could
not be based on the theory that public officials' conduct had deprived
the citizens of their intangible right to honest and impartial
government, which the Court concluded was not a property interest
protected by the statute. Thereafter, petitioner moved to vacate his
convictions on the ground that his wire fraud convictions had been
based soley on a scheme to deprive the Pension Fund of the intangible
right to the honest service of its trustees.
The district court denied relief. Pet. App. B1-B4. It observed
that "(t)he indictment in this case did not allege a pure intangible
right theory of wire fraud" because the defendants "were (also)
charged with scheming to defraud the pension fund of the Wonderworld
property itself" (id. at B2). The court emphasized that "(t)he
indictment alleged two objectives of the scheme to defraud in the
conjunctive() (a)nd the jury instructions required a conjunctive
finding" (ibid.). The court also pointed out that "(t)he ultimate
object of the scheme was the property itself" (id. at B4). The court
accordingly ruled that "McNally dictates no relief" for petitioner
because "the indictment alleged and the jury was instructed that in
order to convict on (the wire fraud counts) it was necessary for the
government to prove beyond a reasonable doubt that the defendants had
schemed to defraud the pension fund of tangible property" (ibid.).
3. The court of appeals affirmed. Pet. App. A1-A10. The court
observed that "(a)lthough the indictment and jury instructions clearly
contain language supporting the invalid intangible rights theory of
mail (sic) fraud, the jury nonetheless was required by the indictment
and instructions to find that the defendants schemed to defraud the
Pension Fund of property rights protected by the wire fraud statute"
(id. at A6-A7). The court concluded that "(i)n light of McNally and
the law of this Circuit, the intangible rights portion of the jury
instructions was not prejudicial when viewed in the context of the
conjunctive indictment and (the district judge's) conjunctive
definition of wire fraud" (id. at A8).
The court of appeals rejected petitioner's contention that the
scheme was not within the reach of the wire fraud statute because its
participants did not seek to obtain something of value for themselves
personally, but rather for the benefit of the Teamsters. The court
pointed out that "(t)he Pension Fund was no less harmed as a result of
defendants' wire fraud scheme to sell the Wonderworld property to
Senator Cannon for a bargain price than if the defendants had
purchased the property themselves and received the benefit of the
$200,000 reduction in the price" (Pet. App. A9). The court concluded
that "(t)he fact that defendants were depriving the Pension Fund of
property for the purposes of securing a benefit of equal or greater
value (i.e., the 'appreciation' of Senator Cannon), does not deflect
from the reality that the pensioners were being deprived of property
without their knowledge by fraudulent means" (ibid.).
ARGUMENT
Petitioner's principal contention (Pet. 10-19) is that his wire
fraud convictions must be vacated in light of McNally because the
indictment and the jury instructions charged only a scheme to deprive
the beneficiaries of the Pension Fund of their intangible right to the
honest services of its trustees. /1/ The court of appeals properly
rejected petitioner's contention.
In the first place, petitioner's contention completely ignores the
fact that the standard of review on collateral attack under 28 U.S.C.
2255 is more stringent than the standard that applies when a defendant
challenges his conviction on direct appeal. To prevail on collateral
attack, petitioner must demonstrate "actual prejudice" resulting from
the error of which he complains. United States v. Frady, 456 U.S.
152, 168 (1982). Moreover, this Court made clear in Davis v. United
States, 417 U.S. 333, 346 (1974), that a change in the substantive law
such as the change made by McNally warrants collateral relief only if,
under the change in the law, petitioner's conviction could be said to
be a "miscarriage of justice." Consequently, petitioner was entitled
to collateral relief from his wire fraud convictions only if he showed
"that under no possible view of his conduct was he guilty of a federal
crime * * *." United States v. Angelos, 763 F.2d 859, 861 (7th Cir.
1985). That he has not shown. Indeed, petitioner merely alleges
error in the indictment and the jury instructions, not that the
evidence presented at his trial would not support a wire fraud
conviction under proper instructions.
In any event, petitioner's contention that the indictment and the
jury instructions charged only a scheme to deprive the Pension Fund
beneficiaries of their intangible right to the honest services of its
trustees is simply wrong. The indictment and the jury instructions in
this case conjunctively charged a single scheme to defraud that had
the dual effect of depriving the Pension Fund of both the honest
services of its trustees and money or property. As the court of
appeals explained, "(t)he jury instructions did not allow conviction
based on the intangible rights theory alone nor as an alternative to
the money or property requirement" (Pet. App. A8). Moreover, as the
court of appeals pointed out, the evidence at trial showed that "(t)he
essence of the conduct in which defendants engaged was the attempted
sale of the Wonderworld property to Senator Cannon and his neighbors
for $1,400,000 in spite of the existence of higher bids for the
property" (id. at A8-A9). While that scheme deprived the Pension Fund
of the loyal services of its trustees, it also "clearly contemplated
depriving the Pension Fund of the highest price for the Wonderworld
property" (id. at A9). Based on the indictment, the evidence, and the
jury instructions, the jury therefore necessarily had to find that the
scheme to defraud was intended to deprive the Pension Fund of money or
property in order to find that the Pension Fund was deprived of the
honest services of its trustees.
For that reason, petitioner's reliance on Stromberg v. California,
283 U.s. 359 (1931), to support his collateral attack on his
convictions is misplaced. Stromberg stands for the principle that a
conviction based on a general verdict must be reversed if the jury was
allowed to find the defendant guilty of the offense based on
alternative theories and one of the theories is determined to be
invalid. /2/ Unlike the situation in Stromberg, however, petitioner's
wire fraud convictions were not based on alternative theories, because
the jury was required to find that the scheme to defraud was intended
to deprive the Pension Fund of both the honest services of its
trustees and money or property. Since the jury was required to find
that the scheme to defraud was intended to deprive the Pension Fund of
money or property in addition to depriving it of the honest services
of its trustees, Stromberg is inapposite. /3/
At bottom, petitioner simply disagrees with the conclusion of both
courts below that the indictment and the jury instructions charged
that the scheme to defraud was intended to deprive the Pension Fund
not only of the honest services of its trustees, but also of money or
property. Petitioner's assertion (Pet. 12-17) that both courts
misconstrued the indictment, the evidence, and the jury instructions
is wholly fact-bound and does not warrant further review. /4/
Finally, Congress recently amended the federal fraud statutes to
provide that a "'scheme or artifice to defraud' includes a scheme or
artifice to deprive another of the intangible right of honest
services." Anti-Drug Abuse Act of 1988, Pub. L. No. 100-690, Section
7603, 102 Stat. 4508. The legislative history of the new provision
explains that "(t)his section overturns the decision in McNally v.
United States * * *. The intent is to reinstate all of the
pre-McNally caselaw pertaining to the mail and wire fraud statutes
without change." 134 Cong. Rec. S17,376 (daily ed. Nov. 10, 1988).
The scheme in which petitioner was involved in this case would clearly
fall within the scope of that new provision. Accordingly,
petitioner's contention that his convictions in this case are
inconsistent with McNally is not a claim that has any prospective
importance.
CONCLUSION
The petition for a writ of certiorari should be denied.
Respectfully submitted.
WILLIAM C. BRYSON
Acting Solicitor General
EDWARD S.G. DENNIS, JR.
Assistant Attorney General
JOSEPH C. WYDERKO
Attorney
MAY 1989
/1/ Petitioner also contends (Pet. 19) that his conspiracy and
Travel Act convictions must likewise be vacated because they were
closely related to his wire fraud convictions. That contention is
frivolous. As the district court stated, "(o)f course McNally has no
impact upon counts 1 and 2, in which defendants were charged and
convicted of conspiracy to bribe a United States Senator and traveling
in interstate commerce to facilitate that bribery" (Pet. App. B2).
/2/ In Stromberg, the defendant was charged with displaying a red
flag in violation of a state law prohibiting such a display for any of
three different purposes, one of which was not a valid ground for a
conviction. This Court reversed, concluding that since "there were
three purposes set forth in the statute, and the jury were instructed
that their verdict might be given with respect to any one of them,
independently considered, it is impossible to say under which clause
of the statute the conviction was obtained" (283 U.S. at 368). In
reaching that conclusion, the Court stressed that "in the instructions
to the jury, the trial court * * * treated the described purposes
disjunctively, holding that the appellant should be convicted if the
flag was displayed for any one of the three purposes named," as an
"or" connected each purpose (id. at 363).
/3/ There is likewise no merit in petitioner's claims (Pet. 7-9)
that the decision of the court of appeals conflicts with United States
v. Price, 857 F.2d 234 (4th Cir. 1988), and United States v. Zauber,
857 F.2d 137 (3d Cir. 1988). In Price, the union officials were
charged only with a scheme to defraud the union of their honest and
faithful services, and the court expressly noted that "(h)ad the
government charged these defendants with defrauding the union of
money, * * * a different result might have been obtained here" (857
F.2d at 236 n.1). Similarly, in Zauber the court observed that "it is
clear that the mail and wire fraud charges were based, and the jury
solely instructed on, an intangible rights theory" (857 F.2d at 144).
In addition, Price and Zauber were decided on direct appeal, and
petitioner bears a heavier burden in this collateral attack.
/4/ Petitioner also complains (Pet. 4-10) that the decision of the
court of appeals denying him collateral relief here is inconsistent
with its earlier decision affirming his convictions on direct appeal.
That contention is based on a mischaracterization (Pet. 6) of the
court's earlier opinion. To be sure, the court in that opinion stated
that the indictment "charge(d) only one offense per count -- one
scheme to defraud the Pension Fund of the loyal services of O'Malley"
(737 F.2d at 614). That statement was made in the context of
rejecting petitioner's challenge to one jury instruction on the ground
that it allowed the jury to reach a non-unanimous verdict (id. at
613). Contrary to petitioner's suggestion, however, his unanimity
challenge to the jury instruction was not based on any claim that some
jurors could find a scheme to defraud the Pension Fund of the honest
services of its trustees while other jurors could find a scheme to
defraud the Pension Fund of money or property (id. at 613-614). In
any event, the court made plain its view of the case at the outset of
its earlier opinion by observing that "the government's theory of
criminal culpability is strikingly clear: the defendants * * *
devised and pursued a scheme to bribe a United States Senator at the
expense of the Teamsters' Central States Pension Fund" (id. at 598).